Shri Niranjan Lal Agarwal, Kolkata V. DCIT, Circle -3, Kolkata, Kolkata

ITA 712/KOL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4987 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2012
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Business income; Opportunity of being heard; Assessment record; Revised return
• Section: 143(3); 263

Judgement Text

I.T.A. NO 7 12/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 712/KOL/ 2012 ASSESSMENT YEAR: 2008-2009 SRI NIRANJANLAL AGARWAL,........................... ............................APPELLANT 48A, PARK STREET, KOLKATA-700 016 [PAN: ADCPA 9883 E] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ...............RESPONDENT CENTRAL CIRCLE-III, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 APPEARANCES BY: SHRI MANISH TIWARI, FCA, FOR THE ASSESSEE SHRI SACHCHIDANANDA SRIVASTAVA, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : FEBRUARY 22, 2016 DATE OF PRONOUNCING THE ORDER : MARCH 04, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX, CENTRAL-1, KOLKATA DATE D 27.03.2012 FOR THE ASSESSMENT YEAR 2008-09 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO DERIVES INCOME FROM HOUSE PROPERTY, BUSINESS, CAPITAL GAIN AND OTHER SOURCES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON WAS ORIGINALLY FILED BY HIM ON 24.12.2008 DECLARING TOTAL INCOME OF RS.6 ,07,214/-. SUBSEQUENTLY A REVISED RETURN WAS FILED BY THE ASSE SSEE ON 23.09.2009 DECLARING TOTAL INCOME OF RS.7,78,709/-. IN THE ASS ESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 30.12.2010 , THE TOTAL INCOME OF I.T.A. NO 7 12/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 6 THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICE R AT RS.39,73,124/- AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES. THE R ECORD OF THE SAID ASSESSMENT CAME TO BE EXAMINED BY THE LD. CIT AND O N SUCH EXAMINATION, HE WAS OF THE VIEW THAT THE ORDER PASSED BY THE ASS ESSING OFFICER UNDER SECTION 143(3) SUFFERED FROM THE FOLLOWING ERRORS, WHICH WERE PREJUDICIAL TO THE INTEREST OF THE REVENUE:- (1) ON VERIFICATION OF THE ASSESSMENT RECORDS, IT WAS NOTICED THAT THE ASSESSEE HAS NOT DIRECTLY DEBITED SECURITIES TRANSACTION TAX IN THE PROFIT & LOSS ACC OUNT. BUT IN A SUBMISSION MADE ON 27.12.2010 BEFORE THE ASSES SING OFFICER THE ASSESSEE HAD ADMITTED THAT STT PAYMENT AMOUNTING TO RS.17,42,353/- HAD BEEN ADJUSTED THROU GH SHARE TRADING LOSS. IN THE ACCOUNTS THE ASSESSEE HA S SHOWN SHARE TRADING LOSS IN 4 PARTS AND NETTED THE ENTIRE GAIN/LOSS OF ALL THE FOUR PARTS. BUT STT PAYMENTS A RE REQUIRED TO BE GROSSED UP SEPARATELY FOR EACH OF TH E FOUR PARTS AND TO BE EXAMINED AS PER 5 TH PROVISO TO SECTION 48 OF THE INCOME TAX ACT, 1961 AND THE SECTION 40(A)(B) O F THE INCOME TAX ACT, 1961, SHORT TERM CAPITAL LOSS HAD B EEN ALLOWED TO BE CARRIED FORWARD ALTHOUGH THERE WAS BE LATED RETURN. (2) ON EXAMINATION OF THE TWO ACCOUNTS SUBMITTED BY THE ASSESSEE IT IS SEEN THAT IN THE SECOND/REVISED ACCO UNTS THE ASSESSEE HAS REDUCED TOTAL SALE OF SAREE AND HAS IN CLUDED A NEW SOURCE OF BUSINESS PROFIT AS SALE OF OFFICE SPA CE. BUT SUFFICIENT ENQUIRIES WERE NOT MADE AT THE TIME OF ASSESSMENT TO VERY THE TWO ITEMS. (3) EXAMINATION OF RECORD REVEALS THAT THE ASSESSEE HAD DONE SOME JOBBING PROFIT. SINCE THE ASSESSEE IS NOT A BROKER, THE INCOME SHOULD BE TAKEN AS SPECULATION P ROFIT INSTEAD OF PROFIT FROM NORMAL BUSINESS AS SHOWN BY THE ASSESSEE. THE LD. CIT, THEREFORE, ISSUED A NOTICE UNDER SECT ION 263 TO THE ASSESSEE POINTING OUT THE ABOVE ERRORS AND SINCE TH E EXPLANATION OFFERED BY THE ASSESSEE IN REPLY TO THE SAID NOTICE WAS NOT FOUND ACCEPTABLE BY HIM, THE LD. CIT HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) WAS ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTEREST OF THE REVENUE IN AS MUCH AS THE ASSESSING OFFICER DID NOT CONDUCT NECESSARY ENQUIRY REGARDING TREATMENT OF SECURITY TRANSACTION TAX (STT) PAYMENT I.T.A. NO 7 12/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 6 AND VARIATION IN ACCOUNTS SUBMITTED BY THE ASSESSEE AND ALSO FAILED TO GIVE PROPER TREATMENT TO SHORT-TERM CAPITAL LOSS AN D TO TAX JOBBING PROFIT UNDER PROPER HEAD. ACCORDINGLY, THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) WAS SET ASIDE BY THE LD. CIT B Y EXERCISING THE POWERS CONFERRED UPON HIM UNDER SECTION 263 WITH A DIRECTION TO THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER AS PER LAW AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263, THE ASSESS EE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUE RAISED BY THE LD. CIT IN ER ROR NO. 1 ALLEGEDLY COMMITTED BY THE ASSESSING OFFICER WAS ALREADY INVO LVED IN THE APPEAL FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) A GAINST THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) AND T HE SAME HAVING BEEN CONSIDERED AND DECIDED BY THE LD. CIT(APPEALS) VIDE HIS APPELLATE ORDER DATED 07.07.2011, THE SAME WAS BEYOND THE SCOPE OF REVISION UNDER SECTION 263 AS PER CLAUSE (C) OF EXPLANATION 1 BELO W SUB-SECTION 1 OF SECTION 263. HE HAS ALSO FILED A COPY OF THE SAID O RDER OF THE LD. CIT(APPEALS) AND INVITED OUR ATTENTION TO PARA 3.1 THEREOF, WHEREIN THIS ISSUE IS DISCUSSED BY THE LD. CIT(APPEALS) AS UNDER :- 3.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. AR. WHILE COMPUTING THE INCOME UNDER THE HEAD BUSI NESS INCOME, THE AO HAS DISALLOWED THE SECURITIES TRANS ACTION TAX OF RS.17,42,354/-. HOWEVER, CONSIDERING THE FAC T THAT THE SAID EXPENDITURE HAD NOT BEEN CLAIMED AGAINST B USINESS INCOME, THERE IS NO BASIS AND REASON FOR MAKING DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IB) OF THE INCOME TAX ACT, 1961. ACCORDINGLY THE ADDITION OF RS.17,42,354/- MADE BY THE AO UNDER SEC TION 40(A)(IB) OF THE ACT IS DELETED. HOWEVER CONSIDERIN G THE FACT THAT THE EXPENDITURE IN QUESTION HAS BEEN CLAI MED AGAINST THE INCOME/LOSS COMPUTED UNDER THE HEAD CAP ITAL GAIN, THE AO IS DIRECTED TO DISALLOW THE SAME AS PE R FIFTH PROVISO OF SECTION 48 OF THE INCOME TAX ACT, 1961 W HICH READS AS PROVIDED ALSO THAT NO DEDUCTION SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD I.T.A. NO 7 12/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 6 CAPITAL GAINS IN RESPECT OF ANY SUM PAID ON ACCOU NT OF SECURITIES TRANSACTION TAX UNDER CHAPTER VII OF THE FINANCE (NO. 2) ACT, 2004. THE APPELLANT WILL GET NECESSARY RELIEF ACCORDINGLY. 4. A PERUSAL OF THE RELEVANT PORTION OF THE LD. CIT (APPEALS)S ORDER DATED 07.07.2011 REPRODUCED ABOVE CLEARLY SHOWS THA T THE ISSUE RAISED BY THE LD. CIT IN HIS IMPUGNED ORDER PASSED UNDER SECT ION 263 WHILE POINTING OUT THE FIRST ERROR IN THE ORDER OF THE AS SESSING OFFICER WAS ALREADY CONSIDERED AND DECIDED BY THE LD. CIT(APPEA LS) ON 07.07.2011 ITSELF THAT IS BEFORE PASSING OF THE IMPUGNED ORDER BY THE LD. CIT ON 27.03.2012 AND THIS POSITION HAS NOT BEEN DISPUTED EVEN BY THE LD. D.R. AS PER CLAUSE (C) OF EXPLANATION (1) TO SECTION 263(1) , WHEREIN AN ORDER REFERRED TO IN SECTION 263(1) AND PASSED BY THE ASS ESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL, THE POWERS O F THE COMMISSIONER UNDER THE SAID SUB-SECTION SHALL EXTEND AND SHALL B E DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSI DERED AND DECIDED IN SUCH APPEAL. SINCE THE ISSUE RAISED BY THE LD. CIT WHILE POINTING OUT THE ERROR NO.1 IN THE ORDER OF THE ASSESSING OFFICER HA D ALREADY BEEN CONSIDERED AND DECIDED BY THE LD. CIT(APPEALS), THE SAME, IN OUR OPINION, WAS BEYOND THE SCOPE OF REVISIONARY POWERS CONFERRE D UPON THE LD. CIT UNDER SECTION 263 AND HE, THEREFORE, WAS NOT JUSTIF IED IN REVISING THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE BY EXE RCISING SUCH POWERS. 5. AS REGARDS THE SECOND ERROR POINTED OUT BY THE L D. CIT THAT THE REVISED FIGURES FURNISHED BY THE ASSESSEE WERE ACCE PTED BY THE ASSESSING OFFICER WITHOUT PROPER AND SUFFICIENT INQUIRIES, TH E LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US HAS NOT B EEN ABLE TO SHOW THAT ANY SUCH ENQUIRY WAS ACTUALLY MADE BY THE ASSESSING OFFICER TO VERIFY THESE REVISED FIGURES WHILE COMPLETING THE ASSESSME NT UNDER SECTION 143(3). THE ERROR NO. 2 AS POINTED OUT BY THE LD. C IT THUS WAS THERE IN THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) CALLING OF REVISION BY THE LD. CIT UNDER SECTION 263. I.T.A. NO 7 12/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 6 6. AS REGARDS THE ERROR NO. 3 POINTED OUT BY THE LD . CIT(APPEALS), THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT SIN CE THE SPECULATION PROFIT AS WELL AS NORMAL BUSINESS INCOME IS CHARGEA BLE TO TAX AT THE SAME RATE, THE ERROR, IF ANY, IN BRINGING TO TAX THE REL EVANT INCOME EITHER AS SPECULATION PROFIT OR NORMAL BUSINESS PROFIT CANNOT BE SAID TO HAVE CAUSED ANY PREJUDICE TO THE INTERESTS OF THE REVENU E CALLING FOR REVISION UNDER SECTION 263 ON THIS ISSUE. WE FIND MERIT IN T HIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE AND SINCE THE LD. D.R. HAS ALSO NOT BEEN ABLE TO CONTROVERT THE STAND TAKEN BY THE LD. COUNSEL FOR T HE ASSESSEE ON THIS ISSUE, WE HOLD THAT THERE BEING NO PREJUDICE CAUSED TO THE INTEREST OF REVENUE AS A RESULT OF ERROR NO. 3 POINTED OUT BY T HE LD. CIT, NO REVISION UNDER SECTION 263 ON THIS ISSUE WAS CALLED FOR. 7. KEEPING IN VIEW THE ABOVE DISCUSSION, WE SET ASI DE THE IMPUGNED ORDER OF THE LD. CIT UNDER SECTION 263 ON THE ISSUE OF TREATMENT OF STT PAYMENT AS WELL AS DETERMINATION OF HEAD OF INCOME UNDER WHICH THE JOBBING PROFIT IS CHARGEABLE TO TAX BUT UPHOLD THE SAME ON THE ISSUE OF LACK OF INQUIRY MADE BY THE ASSESSING OFFICER TO VE RIFY THE REVISED FIGURES FURNISHED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 04, 201 6. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 4 TH DAY OF MARCH, 2016 COPIES TO : (1) SRI NIRANJANLAL AGARWAL, 48A, PARK STREET, KOLKATA-700 016 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 I.T.A. NO 7 12/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 6 (3) COMMISSIONER OF INCOME-TAX (CENTRAL-1), KOLKAT A (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.